The Walt Disney Company has tapped its former CEO Bob Iger to return to head the company for two years, firing his successor Bob Chapek in a move that stunned the entertainment industry.
Chapek is leaving after the company posted lower than expected earnings in the last quarter. Hollywood’s creative community had grumbled about Chapek’s cost-cutting measures and sometimes blunt approach to talent, while theme park regulars had been unhappy with price hikes.
Disney’s quarterly financial performance fell well short of Wall Street expectations on both profit and revenue, a rarity, sending shares tumbling 12 percent. Shares of The Walt Disney Co. are down 40 percent this year.
So, it’s back to Iger.
The company’s stock jumped almost 9 percent before the opening bell Monday.
“The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period,” Susan Arnold, Disney’s chairman, said in a statement.
Arnold thanked Chapek for leading the company through the pandemic, while enthusing over Iger’s stature within the company, which he led for 15 years before his ouster in early 2020.
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Iger has the “deep respect of Disney’s senior leadership team,” she said. She also said that he was “greatly admired by Disney employees worldwide.”
“The company’s robust pipeline of content is a testament to his leadership and vision,” the company’s statement said.
Iger said in the statement that he was “thrilled” to return and “extremely optimistic” about Disney’s future.
“I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling,” said Iger, who is 71.
Hollywood, Florida controversies
Iger replaced Michael Eisner as CEO in 2005 and the former TV weather man won over Wall Street and Hollywood with bold acquisitions and public displays of respect for the creative community and the company’s storied history.
During his 15 years at the helm, Disney absorbed Pixar, Lucasfilm, Marvel and Fox’s entertainment businesses, then launched its Disney+ streaming service. The company is also the parent of ABC, ESPN and Hulu, among other properties.
After Chapek became CEO in 2020, Iger remained as chairman through 2021.
Chapek is stepping down in what has been a tough year for Disney. He faced blowback earlier this year for not using the company’s vast influence in Florida to help quash a Republican bill that would prevent teachers from instructing early grades on LGBTQ issues. The bill sparked a spat between Disney and Republican Gov. Ron DeSantis.
He also was criticized for his handling of Scarlett Johansson’s lawsuit last year over her pay for Black Widow, an unusually public conflict between the studio and a top Hollywood star. The 2021 Marvel film was released simultaneously in theaters and through Disney+ for a $30 rental.
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There are reports of plans for major layoffs as the company maneuvers to improve its profitability.
Currently, Disney+ is ad-free, but in December it will launch a new tiered service for US subscribers. The basic Disney+ service that costs $7.99 US per month will run ads. A subscriber who wants no ads will have to upgrade to a premium service that starts at $10.99 per month, a 38 percent increase over current prices.
Disney said it ended its fiscal year with more than 235 million subscribers to its streaming services. That was above analysts’ expectations of 231.5 million.
Disney’s share price is at about the level it was at when Iger stepped down as CEO in early 2020, closing at $91.80 on Friday. That’s about half its peak of just over $200 a share in March 2021.